Sorry if this is the wrong forum... I'm trying to figure out how does one work out what technology costs are, like in order to make a living out of something, and at the same time be competitive, without undermining your services. Take hosting providers for example... they supply you a cheap package which has already been broken down from a larger package... (or maybe they are just independent providers) I'm wondering how they price it all, I'm assuming its all down to bandwidth, the physical hosting of files would be penny's per gigabyte. So I'm confused as to how they come up prices, is there any logic to costs ?
Its all a math game. if you don't want to oversell, take the total resource amount, divide it by the price, and there's your "break even" cost. Just add a bit on there for overhead (server maitence, licenses, employees etc.) and that's your pice. Its a lot harder than it seems
It all market force determine the price. Such as web designing,if you charge higher than normal,nobody will go with you.
Here on DP for sure In the real world... Not really. There reputation, quality, size of company etc counts. In the real world you can sell a site design you would not get paid $100 for for $20.000 and more. Same for software. Anyway ; for hosting it is kind of easy; you just add all cost + the profit margin you want and then keep dividing by growing numbers of users to see what they would pay for you to make that. Then check a) are you overselling b) what do other hosters do? But also here goes; in DP people by oversold, low quality hosting for almost $0/year ; in the real world there are asking as much as $10.000/server/month for a quad Xeon *without* bandwith. Depends in which market you are playing.
It is a competitive market so most of the time the prices web host charges usually are based on their competitors' pricing. In this highly competitive market, volume is the only way to go. Most would assume that most of their customers would not use their allocated bandwidth and disk space and thus would need to oversell to turn a profit.
Well I chose hosting as an example, because in a way my services do host customer files, which are delivered to webpages worldwide... each delivery is about 150kb and I'm currently delivery 100'000 a month and growing, all for free at the moment. But thats likely to change maybe in the new year.. so hence my question, how does one work out costs on something like that. I don't have any competitors, only a hunch on what to charge. So I'm none the wiser at the moment.